DEMOCRAT FUNDS

New Zealand Herald, Volume LXXIII, Issue 22538, 1 October 1936, Page 12

DEMOCRAT FUNDS

ORGANISER'S ACTION FINANCIAL DETAILS / THE LEADER'S POSITION COURT RESERVES DECISION Further evidence about the innei workings of the Democrat Party was given in the Magistrate's Court yes terday, when the hearing was con eluded of the action by Harry Baulf political organiser, against varioui people connected with the party. Th< defendants were William Goodfellov (Mr. North), J. B. Donald (Mr. A. St G. Browii), A. E. Davy (Mr. Butler) and T. C. A. Hislop (Mr. B. Elliot). Plaintiff claimed! £195 lis 2d, allegec to be the balance of wages and expense due to plaintiff, who was representee by Mr. Dickson. The magistrate, Mr Wyvern Wilson, S.M., reserved hi decision. Continuing his evidence, part o which was heard on Tuesday, Jamc Bell Donald said that the services o Dorothy Foster, now employed by A B. (Donald, Limited, as a secretary, ha< been lent to the Democrat Party an< not hired, A Moral Claim Questioned by Mr, Dickson, witnes said' he certainly considered Baulf ha< a moral claim, and that wages weri due to him. . Mr. Dickson: A claim against whom; Witness: Against the party. I under stand there is sufficient money in thi party to pay every claim. Mr. Dickson: Have you not expresset the view that Mr. Hislop should pa; the amount claimed? Witness: I think Mr. Hislop shoult pay,.in the money lie holds. I have neve: expressed the view that he, as ai individual, should meet the obligation Mr. Dickson: But if no money i: available you think this man shoulc get nothing? Witness: That situation has nol arisen. To a further question, witness saic that if there were no funds, the payment of the money to Baulf might bf a matter for those who had assisted with the formation of the party. Witness was not prepared to state what he •would do on his own behalf in thai event. "I think my treatment of Mr, Baulf has been very generous," he said. Mr. Dickson: Then if. there are mc funds you people will run away from your j obligation ? Witness: I am not legally bound. If there are no party funds at the end of the iourney it will be a matter which wjll have to be considered. Guaranteei of £ISOO Witness added that he had advanced moneys for the party's use, having been told that he would be repaid. When he joined the party he had no knowledge that any money was owing. He gave a guarantee of £ISOO. The party at Well- ' ington said Baulf would have to wait for any money owing to him. Witness acknowledged that he had said the account would be paid. Why witness did not nay it was that the money „ he had was for a sjweific purpose. The Auckland branch paid out a lot of money on behalf of Wellington, and if Wellington had kept to the agreement, and had not asked for money, matters would have been all right. Mr. Dickson asked! witness what happened to the hooka, Witness: Do you suggest I have them? If so. Mr. Diickson, T think you are very unfair. Mr. Dickson: Either you or the young . lady has, or had, them. Witness: I swear on oath that I do not know. I asked Mr. Baulf where they were and he told me he did not know. Names in 'the Books "There may be many persons who woidd like those bonks to disappear," interposed the magistrate, who said the books contained this names of those who were associated with the party, and probably who, now that the party had failed, did not want anything to come to lights Witness said the only books he knew of were the treasurer's book and the minute book. He did not know of anv other. To Mr. Dickson, witness repeated that he thought there were sufficient assets to meet the party's debts. Mr. Dickson: Do you remember Miss Baulf, plaintiff's daughter, being dismissed from the secretaryship of the local branch of the party? Witness replied that he was not aware she had been "dismissed." She was only a young girl and it was considered advisable" to have a very competent person in the office. He understood she went to another position.

Agreed to Wait

To further cross-examination, witness said he suggested to a committee set up to deal with party finance, of which ho was a member, that 3d a mile was a. sufficient allowance for Baulf s car, which was a small one. This was agreed to.'When ho got a larger car, ho was paid 4d a mile. • Questioned hv Mr. North, witness said, that when he joined the committee it was found that f!2o0 was outstuncling. He advanced £ls, while the treasurer, Mr. Denny, advanced £5, the hope being held tbhat enough mono.'y would be sent from Wellington to liquidate the whole' sum, which included money owing to Baulf. Witness found £ISOO for party needs. Davy would not agree to the payment of the' whole of Baulf's account, although some of it was paid. Mr. North: Did he agree to waitr Witness: He had to. We did not have the money. Hislop Trusii Account Witness knew about a sum of £3OOO. Ho had been informed by Davy that it had been paid into the Hislop Trust Account, an account of Mr. Hislop. Davy was very annoyed, as was witness. It had been agreed that all donations should bo placed in the J. B. Donald Trust Account until the £.1500 which he advanced had been liquidated. Witness later received two cheques, each oi' £750, from tlie Hislop account. Mr. North: You seem to have had a slice of the £3OOO.

Witness replied that it had been agreed that the inouey he had advanced should be paid back. Mr. Notth: You think Baulf should bo paid? Witness: Yes, if funds are available, but 1 do not think 1 am responsible, as an individual. ; To Mr. Butler, wlitness said he did not receive any advantage from Baulf's ecrvice's. Ho had am organiser of his own. Witness did not expect to be made a Cabinet Minister if returned. He offered- his services to the people of New Zealand and was not worried about the result. Mr. Butler: You made sure of getting your £ISOO back. Witness: Yes, but they still owe me nearly £4OO. Leader's Evidence In hi 3 evidence given on oath at Wellington, which was submitted to the Court yesterday, Thomas Charles Atkinson. Hislop, solicitor, said he knew the plaintiff but had nothing to do with his appointment, and was not consulted in connection with it. During witness' tour of the Auckland Province, plaintiff was sent with him by the organisation to various places wh»re witness was to address meetings. Witness was elected leader of the party at a conferenco of candidates in Wellington in 1935.

Cross-examined by Mr. 0. C. Mazengarb, witness said he was a member of the party, bub not of the executive or the organisation. The organisation was something different from the party. Mr. Mazengarb: Is it a fact that from the date you were appointed leader there was no meeting of the executive? Witness: I cannot saj% Have you ever heard of the executive meeting?— No. I don't think I have. Did you not perform other functions for the party besides shaping the policy and addressing meetings?—No, except that I paid to them some moneys which had been sent to me, but which were not sent to me by my request. Cheque for £3OOO Did you not receive a cheque for £3OOO made payable to your order?—] received a cheque, but X think the amount was £3250. I am not certain of the exact amount. Did you lodge it to the credit of a Hislop Trust Account? —Yes. Was that trust for the party organisation?—l was to hold the money for the general purposes of the party. You did not pay the money to the treasurer? —No. I was expressly asked to keep it for my own account. The treasurer also knew it was lodged in my account. No question was ever raised about this. Prior to the general election day how much of this money was expended by you ?—The whole of it had been applied in accordance with the arrangement made between Mr. Davy and myself. How much had you expended for party purposes prior to the election? —The whole of it had been applied for the geueral purposes of the party in accordance with the arrangements made by the chief executive officer. Personal Payment ol £IOOO Did this arrangement with the chief executive officer include personal payments to yourself?— Yes. What was the total of those payments to you?—£1000. Did that £IOOO represent a personal profit to yourself in addition to actual out-of-pocket expenses incurred on the tour? —No. It was paid to me to protect me to some extent against anticipated financial loss resulting from a six months' campaign. In actual fact, I have suffered heavy financial loss through the campaign. But your actual expenses of touring and addressing meetings were paid by Mr. Davy, otherwise than out of this cheque?— The greater proportion of all "the expenses of my tour were met, or were intended to be met, from the funds of the organisation itself. In the main |it think they were, although I have fiince found a fair amount unpaid. Davy also held moneys for the party, out of which he paid certain expenses? -—As far as I know practically all the funds were held by the organisation, and were operated on by Davy and Clark for the purposes of the campaign. The £3OOO received by me was, from what I was told, only a small portion of the total funds, and payments out of this £3OOO I made, not of my own volition, but at the direct request of Davy and Clark. Witness said the arrangement that he was to keep £IOOO for himself was made when the cheque was handed to him. The arrangement was not in writing. Election Expenses Owing

Mr. Mazengarb: Apart from the money out of the £3250, did you have an arrangement with Davy for £IOO a month to be paid to your oißce as compensation for your absence from professional work?—A sum of £IOO a month for three months was to be paid to my office under an arrangement I made with my partners. Actually default was made in payment of one sum of £IOO, and I paid it to my partners mysolf, out of my own money. After the general election did you ascertain that there was a sum of approximately £I2OO owing by the party for election expenses to various creditors?— Yes, I believe the actual amount is larger than that. Did you ascertain that Davy had unexpended moneys in his possession? —I was informed that he had a claim to moneys, which have subsequently been paid to him, and out of which he owes £SOO to the organisation. Has Davy expressed his willingness to use this £SOO for the payment of debts of the party if 3 T ou apply the balance of the cheque of £3250? I have not been told so by him, but I have heard indirectly that he is willing to pay his proportion. As far as I' am concerned I have made purely ex gratia payments of approximately £7OO out of my own money since the election toward the payment of election debts, because I did not like people to remain unpaid for services rendered to an organisation with which my name was connected.

Counsel's Submissions

On behalf of Hislop, Mr. Elliot said the only possible persons liable were either Davy, Goodfellow or certain persons who were members of the Democrat organisation or the executive. Hislop was definitely not included. Actually, it was a point that he was neither a member of the executive nor o:F the organisation. There was a distinction between members of the organisation, which was a permanent party structure, and the candidates, whose function was the enunciation of policy. It was possible that a candidate misht be a member of the organisation, but such candidate had to be elected to the executive. Had there been a Democrat Party in the Houso. the leader would have become a member of the executive. Plaintiff had to show clear proof that Hislop was actually a "member" of the organisation, and no real evidence of that had been given. Hislop was not. a contracting party. Counsel then submitted lengthy legal argument, quoting various authorities. Argument tor Plaintiff Addressing the magistrate on behalf of plaintiff. Mr. Dickson said Hislop could not deny being a member of the Democrat organisation. Alternatively, Hislop was a trustee controlling the trust funds of the organisation. He attended meetings, paid out funds for furthering objects and identified himself with the organisation both publicly and from the point of view of inner finance. He had accepted all the fruits of membership, and had hoped to become Prime Minister of the Dominion had the party been returned to office. Davy, counsel added, had made the original contract of employment with plaintiff, while Goodfellow was a party to it, and should share a responsibility for debts incurred. The latter was liable up to the time of his resignation. "One hesitates to say what one thinks of Mr. Donald," said Mr. Dickson. "His conduct in the witness box was unsatisfactory, in that ho refused to answer 'straight-out' questions by a plain 'yes' or 'no.' " Donald was chairman of the committco which controlled funds in Auckland, and his liability could not be denied. Plaintiff would not have joined the organisation if there had not been an express guarantee for payment, especially in view of his bitter experience with other political parties. Actually, the Democrat organisation did not exist in law and—it was an elementary point—in law plaintiff could sue only through its officers. That was the legal position. Mr. Butler submitted that Davy's position in relation to Baulf was always substantially different from that of the others. From first to last Daw was only a paid servant, first of Goodfellcw and secondly of the Democrat organisation when it was formed. He received a salary for his activities, and was not interested in tho policy the party had to propound. His relation to the party was very similar to that of Baulf, except that, bv virtue of his position, he had a seat on the executive.

The magistrate thanked counsel for the legal research they had contributed to the case and said he would make his decision known later.